Tag / South African Customs

by Mike Poverello

SARS publishes updated EDI User Manual

sars-edi-user-manualSARS has been operating Electronic Data Interchange (EDI) with its external stakeholders since 2001. More than 98% of all customs declaration (CUSDEC) transactions are today submitted electronically to Customs and the electronic submission of multimodal cargo reports (CUSCAR) is steadily increasing. Today, declaration processing is fully electronic end-to-end thanks to the availability of highly established EDI and Customs software service providers supporting the local customs and logistics community. SARS has also recently introduced a benefit for compliant cargo reporters who will be absolved of certain manual (paper) submission requirements once they attain an acceptable level of electronic submission compliance and data accuracy.

The ultimate objective is to ensure that all Customs-to-Business (C2B) transactions are electronic to enable full supply chain connectivity between the South African business community and Customs. This in turn enables the possibility of SARS accrediting or approving ‘supply chains’ as opposed to just individual trader segments (importers and exporters). The extent of electronic compliance is also a pivotal requirement for traders operating under the new Customs Control Act, to be enacted in the future.

SARS overall EDI capability extends further than declarations and cargo reports. In recent years Customs-to-Government (C2G) messaging has also been successfully established between SARS and the Department of Trade and Industry (dti) as well as the South African Reserve Bank (SARB). SARS is also engaging other government stakeholders concerning IT connectivity and data exchange.

Moreover, developments for cross-border Customs-to-Customs (C2C) data exchange are also in the pipeline and could come to fruition with the partner administrations in Mozambique and Swaziland in the foreseeable future. These initiatives will usher in increased supply chain connectivity through active use of the Unique Consignment Reference (UCR) between participating customs administrations. The ultimate objective here is the creation of mutual recognition benefits for local and cross-border traders based on their accreditation status agreed between the participating customs administrations.

The SARS Electronic Data Interchange (EDI) Manual (which can be downloaded from the SARS EDI webpage) has been updated with the latest versions of SARS Edifact Data Mapping Guides as well as improved diagrams explaining the functional composition of the various electronic messages specified for Customs processing. Also included are the requirements for registering as an EDI user with SARS.

The manual includes recent updates relating to cargo reporting (manifests) as well as the updated customs declaration message incorporating recent inclusion of customs surety, penalty and forfeiture requirements. The latter enhancement removes another document based requirement (the Form DA70 Provisional Payment) for Customs Brokers with the view streamlining data requirements, enhancing customs billing and customs status reporting with the trade and logistics community. This EDI Manual will be an important document over the coming months and years in that it will feature updated electronic requirements in support of the new Customs Control Act. Watch this space!

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by Mike Poverello

South African Customs launches new X-Ray Inspection Facility in Durban

SARS Customs New NII Ste - DurbanSARS Customs recently launched its new X-Ray cargo inspection facility adjacent to the Durban Container Terminal in the Port of Durban. Following the trend as in other countries, SARS has identified non-intrusive inspection capability as part of its ‘tiered’ approach to risk management.

In 2008, SARS introduced its very first mobile x-ray scanner which was located inside the Durban container terminal precinct as part of South Africa’s participation in the US Container Security Initiative (CSI). While it has proven itself in the development of Customs NII capability, its location and lack of integration with other Customs automated tools has limited its success.

The new Customs inspection facility is a step-up in technology and automation – a Nuctech MB 1215HL Relocatable Container/Vehicle Inspection System. It has some significant advantages over the original mobile version namely –

  • An efficient and cost-effective security solution with a relatively small footprint (site size).
  • 6 Mev dual energy X-Ray technology with high penetration (through 330 mm of steel).
  • High throughput of 20-25 units of 40ft container vehicles per hour.
  • A unique modular gantry design which improves system relocatability.
  • Self-shielding architecture which requires no additional radiation protection wall.
  • Advanced screening and security features such as organic/inorganic material discrimination.
  • High quality scanning image manipulation tools allowing the customs image reviewer the ability to verify and distinguish the contents of a vehicle or cargo container.

Since its launch more than 350 scans have been performed. Suspect containers were sent for full unpack resulting in various positive findings.

The new relocatable scanner is easier to operate and significantly faster than the mobile scanner. In addition, scanned images are now automatically integrated into SARS Customs case management and inspection software making case management both seamless and efficient.

It is anticipated that until October 2014, both the new scanner and the existing mobile scanner operations will co-exist. During this time, the new scanner will operate risk generated cases directly from SARS automated risk engine. Unscheduled or random interventions will continue to occur at the old scanner site, which operates 24/7.

Plans are in place to decommission the mobile scanner after October 2014. The new scanner will then operate on a 24/7 basis.

by Mike Poverello

SARS – Modernisation milestone materialising

Interfront logo2

Its been some time since I’ve penned an article on the South African Customs Modernisation Programme. Aside from it being the SA Revenue Service’s prerogative to communicate and publish notice of its internal developments and plans, some caution always needs to be exercised observing bureaucratic protocol, ensuring that the official message is forthcoming from SARS. Given the widespread interest in the programme as well as the development of the Interfront [formerly Tatis] integrated customs border management solution (iCBMs) as a wholly owned development of South Africa, I think it not out of place to inform the public interest on this matter. Readership of this blog has an extensive global following and a specific interest in Interfront developments.

Unlike ASYCUDA, Sofix, e-Biscus, and a host of other integrated Customs-tailored business solution offerings, Interfront’s solution for SARS will not include a client user frontend. In other words, the Interfront system (iCBMs) will essentially drive declaration backend processing. This comprises a fully integrated declaration validation and processing engine, supported by a sophisticated tariff engine and duty calculator; the latter offering future web-based services for customs users. In order to compliment the SARS corporate and standardised user interface approach, the iCBMs interfaces with SARS’s revenue accounting, trader registration, risk management, and case management workflow systems. Not only does this leverage cost savings and efficiencies, but ensures a unified ‘workspace’ for all of SARS employees.

Much of the Interfront technology is therefore hidden to the customs user, with traders experiencing an identical interface with SARS Customs, as it does today. From the outset of the Customs Modernisation Programme (July 2010), the approach has followed pragmatic migration of customs electronic clearance processing – across its 30 odd legacy systems – towards an integrated clearance process that could mimic the functionality featured on the new iCBMs. The modern technology and scalability of Interfront offers the ability and agility to enhance service levels and efficiencies to another level. At the same time, operational policies and procedures have been modernised with the aim and intent of meeting the requirements contained in Customs new Control and Duty Bills.

Much of the ‘change’ experienced by both customs officers and the trade over the last 2 years has prepared the country for the eventual migration to the new system. These have been significant, and at times painful changes, not without anxiety and apprehension. Over the last 6 months an even more painstaking and taxing effort has been expended by the Customs Modernisation Team, Interfront and other service providers in addressing a seamless harmonisation and switchover of customs business from disparate legacy systems to a new customs technology platform. The “Parallel Run” has witnessed the daily comparison of customs clearance data between the old and new systems, identification and logging of disparities (bugs), modification of the two environments to ensure the same result is achieved. This has not been an easy and simple process, as any country having undergone a system switchover can attest to.

This month, February 2013, service providers to the customs industry are readying their resources to commence user testing. This implies that service providers (computer bureaus) will engage their clients to prepare test cases for submission to customs to test the new Interfront process. Given that Customs legacy systems and Interfront have been synchronised to a high level of compatibility, the process for traders should not reveal much difference to what they have experienced over the period of modernisation over the last 2 years. One area of note will be the structure and content of Customs Response messages. Traders will have to familiarise themselves and test their interpretation of these messages to ensure they perform or respond appropriately to the instructions.

Satya Prasad Sahu - Technical Officer at the WCO provided members of SACU, SADC and the EAC comprehensive guidelines for the development of the GNC Utility Block concept in Africa (February 2012)

Satya Prasad Sahu – Senior Technical Officer at the WCO provided members of SACU, SADC and the EAC comprehensive guidelines for the development of the GNC Utility Block concept in Africa (February 2012)

In terms of compliance and compatibility with international developments, the new iCBMs is engineered on the WCO Data Model. All relevant simplification processes as exemplified in the Revise Kyoto Convention are likewise factored into its design, although not all of these will be immediately available with the initial rollout. Introduction of the new Customs Control and Duty Acts will require these principles to be fully functional and operational, however.

The WCO Data Model is the pivotal design component around which most of the new system’s business and validation rules are centred. This in itself is a major achievement as it bodes well for all future ‘cross border’, customs-2-customs connectivity initiatives. In this regard SARS is well advanced in bilateral and multilateral projects with key trading partners, for example IBSA (cross-global trilateral initiative), and in Africa, we are working with SACU, SADC, COMESA and the EAC to bring about regional customs connectivity. On a bilateral basis, initiatives with Swaziland, Mozambique and Zimbabwe are developing nicely. A significant contributor to cross border/cross global customs connectivity is undoubtedly the excellent work brought about by the dedicated members of the WCO’s Globally Networked Customs adhoc workgroup. In June last year, the WCOs policy Commission unanimously endorsed the GNC architecture and Utility Block approach. African customs connectivity efforts have likewise adopted this model which ensures harmonisation and uniformity in approach, legal dispensation, data exchange, risk management and procedure. The WCO moreover plays a overseeing role in many of these GNC and capacity building initiatives across the globe – this assists greatly in sharing and learning of experiences.

I would think that the above should be sufficient to wet the appetites of customs practitioners, traders, ICT technocrats, and perhaps even legislators and bureaucrats on developments in South Africa. Subsequent to the launch of Interfront SARS will make its ideas and strategy relating to forthcoming initiatives known to trade and the business community. A Year of Innovation? Yes, and hopefully a happy tale that will bode well for the South African trade and supply chain logistics community, and some good fortune for Interfront in its business development in the region and beyond!

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by Mike Poverello

2012 in review

The WordPress.com stats helper monkeys prepared a 2012 annual report for “What Happened to the Portcullis?“. A special thanks to everyone who has browsed regularly, commented or contributed to this blog. I am deeply grateful and appreciative! Mike

Here’s an excerpt:

4,329 films were submitted to the 2012 Cannes Film Festival. This blog had 52,000 views in 2012. If each view were a film, this blog would power 12 Film Festivals

Click here to see the complete report.

by Mike Poverello

Customs Modernisation – positive impact on Doing Business in South Africa!

South Africa ranks 39th out of 185 countries surveyed in the latest International Finance Corporation (IFC)-World Bank ‘Doing Business’ report, which was published on Tuesday.Last year, South Africa ranked 35 out of 183 countries assessed.

The country is placed above Qatar and below Israel in the Doing Business 2013 report, which covers issues such as starting a business, dealing with construction permits, getting electricity, registering property, accessing credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Singapore remains at the top of the ease-of-doing-business ranking for the seventh consecutive year, followed by Hong Kong and New Zealand. Poland improved the most in making it easier to do business, by implementing four regulatory reforms in the past year.

South Africa led the pack in terms of improving in the ease of trading across borders through its customs modernisation programme, which reduced the time, cost and documents required for international trade. “We hope that through the streamlining of procedures, we will see the growth of commerce in the country,” said coauthor of the report Santiago Croci Downes.

The Doing Business 2013 report stated that improvements in South Africa have effects throughout Southern Africa. “Since overseas goods to and from Botswana, Lesotho, Swaziland and Zimbabwe transit through South Africa, traders in these economies are also enjoying the benefits,” it stated.

Another 21 economies also implemented reforms aimed at making it easier to trade across borders in the past year. Trading across borders remains the easiest in Singapore, while it is the most difficult in Uzbekistan.

Out of the 185 economies assessed in the 2013 report, South Africa ranked 53rd for starting a business, 39th for dealing with construction permits, 79th for registering property, 10th for protecting investors, 32nd for paying taxes, 82nd for enforcing contracts and 84th for resolving insolvency.

The country ranked low, at 150, for ease of access to electricity, while it tied at the top with the UK and Malaysia for ease of access to credit. Croci Downes added that it was still too early to tell whether the recent labour unrest in the mining and transport industries would have an impact on South Africa’s ranking or on foreign direct investment .

Meanwhile, the IFC and World Bank reported that of the 50 economies making the most improvement in business regulation for domestic firms since 2005, 17 were in sub-Saharan Africa.

From June 2011 to June 2012, 28 of 46 governments in sub-Saharan Africa implemented at least one regulatory reform making it easier to do business – a total of 44 reforms.

Mauritius and South Africa were the only African economies among the top 40 in the global ranking. World Bank global indicators and analysis director Augusto Lopez-Claros said Doing Business was about smart business regulations, not necessarily fewer regulations. “We are very encouraged that so many economies in Africa are among the 50 that have made the most improvement since 2005 as captured by the Doing Business indicators.”

IFC human resources director Oumar Seydi added that lower costs of business registrations encouraged entrepreneurship, while simpler business registrations translated to greater employment opportunities in the formal sector.

“Business reforms in Africa will continue to have a strong impact on geopolitical stability. We encourage governments to go beyond their rankings. Ranking does matter, and competition is important, but that is not all that counts. What truly matters is how reforms are positively impacting growing economies,” he said.

African economies that have improved the most since 2005 include Rwanda, Burkina Faso, Mali, Sierra Leone, Ghana, Burundi, Guinea-Bissau, Senegal, Angola, Mauritius, Madagascar, Mozambique, Côte d’Ivoire, Togo, Niger, Nigeria, and São Tomé and Príncipe. Source: http://www.polity.org.za

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by Mike Poverello

Mozambique Tomato Mafia – Customs link?

Mozambique’s Minister of Industry and Trade, Armando Inroga, has promised that the people responsible for restricting the entry of imported tomatoes into Mozambique will be arrested, reports Thursday’s issue of the Maputo daily “Noticias”. Since early March a group of speculators has successfully pushed up the price of tomatoes in Maputo markets by obstructing cross-border trade, sometimes physically seizing trucks hired by small scale Mozambican importers. The group, in collaboration with some South African citizens, has taken up positions on the South African side of the border and is preventing other importers from bringing tomatoes into Mozambique. To achieve this, they evidently enjoy the protection of some people within the South African police or customs service. Huh! Really?

As a result, the price of tomatoes in Maputo’s main wholesale market has more than doubled in the space of five weeks, rising from 200-250 meticais (about seven to nine US dollars) to 500 to 600 meticais for a 22 kilo crate.

Inroga described the obstruction to trade in tomatoes as “illicit and criminal” and in violation of the rules governing the SADC (Southern African Development Community) Free Trade Area. He said that the Mozambican and South African governments are now working together to guarantee the normal circulation of people and goods on both sides of the border. The government sent a team from the National Inspectorate of Economic Activities (INAE) to work with the South African authorities, with the support of the Mozambican consulate in the eastern South African city of Nelspruit.

“The South Africans have begun to investigate these acts to identify the culprits and arrest them”, said Inroga. “Very soon the people associated with this movement to obstruct cross-border trade will be detained”

Mozambique resorts to importing tomatoes from South Africa because national production is insufficient to meet demand, particularly in Maputo which consumes 40 tonnes of tomatoes a day. Source: Noticias, Mozambique

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by Mike Poverello

Advancing the argument for sealing cargo and tracking conveyances

South African Customs law provides for a seal integrity regime. This consists in provisions for the sealing of containerised sea cargo as well as sealable vehicles and trailers. These requirements have, however, not been formally introduced into operation due to the non-availability (until recently) of internal systems and cross-functional procedures that would link seal integrity to known entities. To explain this in more layman’s terms, it is little use implementing an onerous cargo sealing program without systems to perform risk assessment, validation of trader profiles and information exchange. It’s  like implementing non-intrusive inspection (X-ray scanning) equipment without backward integration into the Customs Risk Management  and Inspection environment and systems. It has often been stated that a customs or border security programme is a layered approach based on risk mitigation. None of the individual elements will necessarily address risk, and automation alone will likewise not accomplish the objective for safe and secure supply chains. Moreover, neither will measures adopted by Customs or the Border Agency succeed without due and necessary compliance on the part of entities operating the supply chain. It therefore requires a holistic strategy of people, policy, process and technology.

In the African context, it is surmised that the business rationale will be best accomplished with a dual approach on IT connectivity and information exchange. Under the political speak there are active attempts within SACU, SADC, COMESA and the EAC to establish electronic networks to facilitate and safeguard transit goods. Several African states are landlocked and are not readily accessible, some requiring multiple transit trips through countries from international discharge in the continent to place of final destination. National laws of each individual country in most instances provide obstacles to carriers achieving cost effective means in delivering cargoes. Over and above the laws, there exists (regrettably) the need to ‘grease palms’ without which safe passage in some instances  will not be granted. Notwithstanding the existence of customs unions and free trade areas, internal borders remain the biggest obstacle to facilitation.

Several African logistics operators already implement track and trace technology in the vehicle and long-haul fleets. This has the dual purpose of safeguarding their assets as well as the cargoes of their clients which they convey. Since 9/11, a few customs administrations have formally adopted ISO PAS 17712 within their legislation to regulate the use of high security seals amongst cargo handlers and carriers. In most cases this mandates the use of high security ‘mechanical’ bolt seals. However, evidence suggests there is a growing trend to adopt electronic seals. Taiwan Customs for one has gone a significant way in this regard. Through technological advances and increased commercial adoption of Radio Frequency Identification (RFID) technology the costs are reducing significantly to warrant serious consideration as both a viable and cost-effective customs ‘control’ measure.

Supply chain custody using RFID as an identifier and physical security audit component – as provided for in ISO 17712 – is characterized by the following:

  • it uniquely identifies seals and associates them with the trader.
  • the seal’s unique identity and memory space can be used to write a digital signature, unique to a trader on the seal, and associating that seal with a customs declaration.
  • using customs trader registration/licensing information, together with infrastructure to read seal information at specified intervals along a route to create a ‘bread-crumb’ audit trail of the integrity of the cargo and conveyance.
  • using existing fleet management units installed in trucks to monitor seal integrity along the high risk legs of a cargo’s transit.
  • record the seal’s destruction at point of destination.

Looking forward to the future, it is not implausible for customs and border authorities to consider the use of RFID:

  • as a common token between autonomous customs systems.
  • to verify and audit that non-intrusion inspections have taken place en-route, and write that occurrence to the seal’s memory with the use of an updated digital signature issued to the customs inspection facility.
  • to create a date and time stamp of the cargo’s transit for compliance and profile classification – to confirm that transit goods have actually left the country as well as confirm arrival at destination (to prevent round tripping).
  • Lastly to archive a history of carrier’s activities for forensic and/or trend analysis.
This is a topic which certainly deserves more exposure in line with current regional developments on IT-connectivity and information exchange. A special word of thanks to Andy Brown for his contribution and insight to this post.
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